Pins configured as OUTPUT
Pins configured as OUTPUT with pinMode() are said to be in a low-impedance state. This means that they can provide a substantial amount of current to other circuits. This makes them useful for powering LEDs because LEDs typically use less than 16 mA (see electrical characteristics for more info on pins max current). Loads greater than 16 mA (e.g. motors) will require a transistor or other interface circuitry.
Pins configured as outputs can be damaged or destroyed if they are connected to either the ground or positive power rails.